Massachusetts Governor Gets Passing Grade

Having fended off pressure to raise taxes in the face of a FY 2003 budget shortfall, Massachusetts Governor Mitt Romney is earning good grades. According to a report card devised by the Beacon Hill Institute at Suffolk University, Romney deserves a solid B+ for his recent performance.

“Considering what he was up against, he did a pretty good job,” says David G. Tuerck, executive director of the Beacon Hill Institute and chairman of the economics department at Suffolk University. “Judging from our criteria, Governor Romney understands the principles of good budgeting.”

“When Governor Romney came into office,” agreed Mary Ellen Scott, president of United Personnel Services Inc. and a member of the Springfield Chamber of Commerce, “Massachusetts was (and still is) facing some very challenging economic situations. I feel he has done a capable job in dealing with the state’s loss of revenues in this recent recession and in balancing the budget while maintaining basic services.”

The institute graded Romney this fall according to five principles of effective budgeting: neutrality, equity, efficiency, responsibility, and limiting government. The governor has kept most of the promises on which he campaigned last year.

The governor “has championed business-friendly bills through the state legislature,” noted Scott. “I believe that forging alliances within the House and Senate should be one of his primary goals for 2004 in order to facilitate that process in the future.”

Romney met the test of responsibility by using his veto pen to make certain the Commonwealth’s spending would not exceed revenues. With regard to efficiency, his efforts to close the FY 2004 budget gap met with some success, although he failed to convince the legislature to accept his consolidation of the Massachusetts Turnpike Authority and Highway Department.

Failing to Limit Government

The Commonwealth’s FY 2003 budget ended with a small surplus, and the FY 2004 budget will be balanced at $23 billion. Nevertheless, Beacon Hill faulted Romney for his failure to achieve the right balance between the needs of government and those of taxpayers and businesses. According to the Beacon Hill analysts, voters want a government that takes a smaller share of the economic pie.

The opponents of limited government assert the Commonwealth’s share of the economy cannot be made smaller, because current services must be maintained, and unless enough revenues are brought in to cover those services the budget cannot help but be in deficit. Romney appears to have bought into this notion of a “structural deficit.”

Implicit in the “structural deficit” notion is the assumption that government is powerless to reduce the cost of providing services, and therefore the only remaining recourse is to raise taxes. That assumption, according to Beacon Hill, is clearly flawed.

“Unlike a consumer who walks into a grocery store with less money to spend, government has a lot of control over what it pays for things,” notes Tuerck. “If government has the capacity to get what it buys at lower prices, then it does not have to shrink the services it delivers even if the amount of money it brings in temporarily levels off or falls.

“We can’t fault the governor for having a legislature that makes such reforms a daunting challenge,” says Tuerck. “But we can fault him for buying into the idea of a structural deficit that makes it impossible for him to make any meaningful dent in the size of government.”

Frank Conte is director of communications and information services for the Beacon Hill Institute. His email address isbhi@beaconhill.org.